Liquidity pressures are emerging as a key concern for Zimbabwe’s short-term insurance sector as 10 of the 21 direct insurers reported negative working capital in the first half of 2026, with delayed claims accounting for the bulk of complaints received by the insurance regulator.
According to the Insurance and Pensions Commission (IPEC), liquid assets held by short-term insurers fell by two percent to ZWG4.96 billion – equivalent to US$185.17 million – by 30 June from US$188.58 million at the end of 2025.
The decline coincided with increased claims during the period, putting pressure on insurers to maintain sufficient cash and other liquid assets to meet short-term obligations.
IPEC said 10 insurers recorded current ratios below one, signaling potential short-term solvency challenges.
“This financial strain has been reflected in operational issues, notably delayed claims settlements,” the regulator said in its 2026 half-year sector report.
Delayed claims accounted for 81 percent of all complaints against direct insurers, with 117 of the 144 complaints received relating to delays in settling claims.
The regulator said insurers could be facing liquidity constraints because of their reliance on slow-moving assets, including receivables from agents and brokers and reinsurance recoveries that had not yet been received.
IPEC has called on insurers to strengthen their liquidity management frameworks, including weekly cash-flow forecasting and stress testing.
It also wants insurers to maintain higher US dollar liquidity buffers to support claims denominated in foreign currency and improve premium collection processes to reduce pressure from outstanding receivables.
The pressure on liquidity comes as claims increased significantly during the six months to June.
Incurred claims rose 58 percent to US$71.13 million from US$44.94 million in the corresponding period in 2025, pushing the claims ratio to 53 percent from 37 percent.
However, insurers reduced their expense ratio to 45 percent from 60 percent, keeping the combined ratio broadly stable at 98 percent, compared with 99 percent previously.
IPEC also reported that insurance liabilities increased two percent to US$133.64 million during the period, while reinsurance liabilities fell 10 percent to US$32.95 million.
The regulator said the contrasting movements required closer examination to ensure insurers’ retention levels remained consistent with their capital positions and risk appetite. It will also require treaty adequacy assessments, particularly for catastrophe-prone classes and US dollar-denominated obligations.
The report said the regulator would intensify supervision of insurers with persistent negative working capital and repeated claims settlement delays.
It will also conduct quarterly reviews of liquidity ratios, reinsurance recoverable ageing and prescribed asset compliance.